Depending on the governing documents, a vote for the special assessment may or may not have been necessary (that being said, in my representation of Associations we likely would have recommended a vote for such a large loan and special assessment regardless of any requirement). What is shocking here is the reported reserves, or the lack thereof. A tower condominium having less than $600K in reserves is ridiculous. That will not replace an elevator. This was a 40 year our 20 story tower on the beach, it needed significantly higher reserves. Likely not $15 million, but multiple times more than what it had.
As I noted above, the Association would have a master insurance policy cover the âbricks and sticksâ. It should have a commercial general liability policy and directors and officers liability policy, as well. Suffice to say, the claims involved here will run beyond any such policy limits.
In my state (not Florida) the original developers and contractors would be out under the statute of repose (4 years absent fraud).
I have not seen the filed lawsuits, but the plaintiffs will likely sue: the Association, the officers and directors of the Association, the engineer, the town, the management company, and the law firm representing the Association. Some of these entities likely have little to no responsibility, but the plaintiff is looking for deep pockets at this time.
I want to follow up on my last post. Our advice as a firm is that a special assessment is evidence of poor fiscal planning or an emergency. Emergencies happen. But, special assessments should not be used to pay for regular maintenance, repair, and replacement (three different concepts). That is what reserves are for. The problem is few associations want to reserve for long term capital replacements. For example, asphalt has a lifetime, it will have to replaced. You can talk to an engineer and figure out its lifetime and estimate its replacement cost. You can use that to back in your reserve calculations for your associationâs budget. That WILL mean raising your assessments. But, when it comes time to replace the asphalt, the money is thereâŠno need for a special assessment. Same for roofs, elevators, etc. This is somewhat different What may not have happened here is that the building did not have a periodic inspection of the premises by a structural engineer (this is an assumption, not known). This should be done by every association, especially tower condominiums. Yes, it is a cost, but it gives you an idea of the issues with your building so you can see the emergencies coming at you.
On a smaller scale, the neighborhood I live in should have been saving money SINCE 1990 to repave our half-mile long road. The annual road dues back then were $100 - thatâs what we agreed to when we bought our houses. But it was just a âroad fund,â not a formal road association. When we tried to go up on dues, one couple vehemently disagreed - they even had their attorney write us a letter stating we would face legal action if we asked for more. They said there was no mechanism in the original agreement for increasing dues, and that those dues had been intended for snow plowing only. So the dues sat at $100 until now. It took us almost 15 years to incorporate as a formal association. And guess what, the road is falling apart and itâs going to cost a fortune to fix. With only 13 houses on the road, we will each have a stiff bill. Going through this experience is why I would certainly never buy a condo.
I hear you. Unfortunately, I live this experience every day representing associations. It is not uncommon for me to go to meetings and have Boardâs brag that they havenât raised assessments in ten years. My response usually is to ask if prices today are the same they were ten years ago. The room usually goes silent. I then begin a calm explanation of reserves.
I just donât get it. Itâs not rocket science. My neighbors have to have understood that we would eventually face a huge paving bill. Theyâve lived here for over 30 years, so itâs not as if they thought the issue would go away before they moved.
The difficult couple unfortunately lives directly across the street from us. The husband has written some snarky emails about me - so weird. Iâm always afraid Iâm going to run into him when I go out to get the mail.
Of course, your 13 homeowners can just let the shared road deteriorate to a dirt trail. But then it will cost more than $100 per year for each to buy and maintain a 4x4 vehicle to drive down the dirt trail.
Similar to how various levels of government know that their promised employee pensions (or anything else, like road maintenance, schools, etc.) are underfunded, but no one wants to pay the taxes needed for the desired or expected level of service.
There is no choice but to live in a condo or at least be part of an association in many places, including Miami. No one has a stand alone house with only state/county/city roads maintained through taxes.
I lived in Florida and the townhouse I rented was part of two associations, one for the complex, one for the entire community and the swimming pool, the rec center. I think it took care of the mowing of the parkways and parks too (we were an unincorporated area). It is impossible to avoid unless you live in the boonies, and then you are going to have septic and wells that YOU have to maintain. Wanting to live on the ocean is going to mean condos and associations, usually multiple layers.
A homeownerâs association is like another layer of very local âgovernmentâ to handle shared infrastructure within the community and other issues which those outside the community typically have little reason to care about. Unfortunately, having another layer of âgovernmentâ brings with it the usual political issues, including fights about âtaxesâ (homeowner association fees and assessments), spending (on such things as maintenance and repairs), corruption (such as steering contracts to contractors with connections on the board, even though they may not give the best value for the money), and rules (such as what decorations you can put on your house).
My parents have lived in their DC area suburban home for over 50 years and have no HOA. Newer developments in their city have them, but the original 7500 homes that were built do not an HOA.
I donât have an HOA but I do live in a special tax district which means we pay our taxes to the county/state, but my community gets a portion of them back (simplistic way of putting it) for maintaining community owned property among other things.
But weâll still quite probably be buying a condo on a beach in the next year or so and renting some between now and then. Iâll just make sure my engineering H thoroughly inspects the building first. So many stand. One falls and that one had ample indication ahead of time that things were amiss.
I think the thing to learn from this bad event is to pay attention to whatâs going on.
Iâve never lived in a home with an HOA and donât think I ever would. For all the reasons discussed here. I donât think most neighborhoods, except townhouse/condo ones which are the minority, in NJ, have them. I definitely prefer regular government that Iâm already paying taxes to to keep up with what needs getting done. I also donât want to be told what color I can paint my house, what Christmas decorations Iâm allowed, what flags I can fly, or any of the other controlling nonsense I read about.
For stand alone homes I agree with you. I never want a HOA. With condos one needs to have something for the common grounds. The benefit is not having to take care of the common grounds yourself, but this situation shows us the owners need to pay attention to more than lawn care.
Iâm pretty sure the gated communities around here have HOAs, but I live in a neighborhood that was developed in the 1920s. We have a totally voluntary neighborhood association that worries about our local park. We organize block parties, clean-up days at the pond, raise money and get grants to remove poison ivy and even got enough grants and donations to add a good 4 or 5 acres to the park in the time Iâve lived here.
We once considered buying a townhouse in a small development without HOA. The issue that kept us from buying this nice place was that the roof replacement was imminent, and because of the ways the development was constructed and deeded, all roofs needed to be replaced together. Most of the units were rented⊠I can only imagine what it would take to herd the owners when the time came. An HOA with a decent amount in reserves would have taken care of this.
The general discussion of HOAs, or whether User X will buy a home with an HOA, or personal anecdotes around User Yâs HOA, while fascinating, really belongs in its own thread. Going OT in the cafe is generally fine, but such posts in this thread risk diminishing the stated topic.
A reminder that multifamily buildings and townhomes, as a category, save tons of energy and land relative to single-family homes. Many of the costs of single-family housing fall on the general public, not just on the homeowner. I donât consider my building collapsing on me to be a reasonable cost to achieve my environmental goals, but condo-board drama is a small price to pay.
